OTTAWA - Getting guns out of the hands of young, heavily armed rebels is a way for Canada to help bring lasting peace to the new Libya, says Ottawa's envoy to Tripoli.

The possibility of Canada working to disarm the Libya's rebel fighters who overthrew dictator Moammar Gadhafi was raised last week by Prime Minister Stephen Harper at the United Nations.

Canada's ambassador to Libya, Sandra McCardell, says Libya has a strong economic base on which build a functioning democracy. Indeed, some two dozen Canadian companies have come forward to express interest in doing business in Libya.

But the rebuilding will be much harder if Libya remains the heavily armed society it is today.

"The less bright view is that there are checkpoints throughout the city. There are a lot of guns in circulation, and I personally rode up a hotel elevator with two Kalashnikovs beside me," McCardell told The Canadian Press in a wide-ranging interview.

McCardell returned to Tripoli earlier this month to reopen the Canadian embassy. She was forced to flee on Feb. 26, prior to the six-month NATO-led aerial bombardment in support of Libyan civilians and their rebel, National Transitional Council or NTC.

"There are armed men that hold these guns and one of the big challenges after any conflict like this is to get a hold and control of the guns, and the young men that carry them," McCardell said. "We're persuaded that's a priority and so is the NTC."

Canada will co-ordinate its way forward on helping Libya with its international partners, who will work under a UN umbrella. Assessment teams are on the ground in Libya and are meeting with its new governing authority, the NTC, to plan the next moves, she said.

McCardell was in Ottawa briefly, after her clandestine return to Tripoli a few weeks ago with a handful of diplomats to check on the condition of Canada's abandoned diplomatic mission.

Aside from a few stray bullets through windows -- unintended crossfire, she believes -- the embassy was in relatively good shape and McCardell will soon be back in Tripoli. She hopes to have the embassy fully functioning again soon.

Two of her priorities are making contacts with Libya's new government, and helping Canadian companies that were forced to leave -- including Alberta oil producer Suncor, and Montreal engineering firm SNC Lavalin -- resume operations there.

McCardell has spent the last six months staying in regular contact with Canadian companies that left Libya.

"Libya was a challenging market beforehand and it's going to be a challenging one to navigate going forward as well," said McCardell.

Some companies are coming forward, she said, "because they think that, perhaps, it's going to be a greater emphasis on business by rule of law than was the case in the past."

Though there will be business opportunities in the new Libya, McCardell suggested it won't be open season.

Unlike other post-war countries, the damage to Libya's key infrastructure and other institutions was not widespread. NATO air strikes in Tripoli did not cause widespread destruction, she said.

"You'll have a specific government building that's been hit, and nothing around it. The bridges are intact, the power plants are intact. These kinds of big infrastructure projects weren't touched in the recent period," said McCardell.

The oil must flow again so the Libyan people can start rebuilding, she said. The recent unfreezing of Gadhafi's foreign assets, including $2.2 billion in Canada, will help alleviate the current liquidity crunch, but the ports and refineries need to resume operations.

"I think because it's a relatively wealthy country, no one thinks that it needs to be aid dependent or anything like that," she said. "They should absolutely be able to support themselves, and to do that based on their natural healthy economy, which is oil."

Before February's rebellion, Libya provided only about two per cent of the world's oil, but there has been a negative ripple that has push down the international price of oil and hurt the daily lives of the Libyan people, said McCardell.

"There are people whose homes or businesses have been damaged or disrupted in the last period. There are families that now have widows or orphans that require support. There is a general need to get the whole system up and running."

McCardell sees encouraging signs Libya's new leaders are up to the challenge of delivering on their promise to the international community to build a free and fair society.

"I found it interesting in one of their recent constitutional declarations, they had three or four articles devoted to things such as: the government cannot come into your house, the government cannot listen to your phone calls -- kind of stuff that we would take for granted they're putting in their constitution."

One more obstacle needs to be removed for Libya to move forward -- Gadhafi needs to be captured and brought to justice. She calls it's a "helpful sort of line to draw to actually have him be captured and tried for the crimes that he's committed."

McCardell is optimistic -- like Harper and the Canadian commander of the NATO mission, Lt.-Gen. Charles Bouchard --that Gadhafi can be found during the next three-month phase of the military mission.

McCardell encountered the dictator at numerous large events since her 2009 arrival in Libya, and one occasion when she had a brief conversation with him.

"A lot of dictators have different personas. Many of them come to power with a certain charisma. They wouldn't rise the way they do if they didn't have a degree of personal charm and an ability to lead," the envoy recalled of their brief conversation.

"What we see afterwards is that can also turn very dark and they're willing to use any means to sustain their power longer term. I think he's someone who had that full range."